Will 'zombie economics' prove Florida's proposed nuclear power plants are no longer competitive?

Westinghouse’s AP1000 nuclear plant, shown in this rendering, is Progress Energy's choice for its new Levy County site -- if the plant ever gets the corporate go-ahead.

Wake up and good morning. Well, Progress Energy and Duke Energy, stalled in their merger by federal regulators worried about too much monopoly power, say they are again revamping terms of their deal to make the feds happy. According to the Raleigh, N.C., paper, the News & Observer, Progress Energy CEO (who will also be CEO of the combined Duke-Progress giant should it happen) Bill Johnson said the trick of the latest merger proposal will be to "preserve the $650 million in savings promised to regulators in the Carolinas while also selling off a sizable chunk of electricity into wholesale markets to appease federal regulators."

Why do we care here in Florida? Obviously, Progress Energy Florida is part of this proposed acquisition by Duke of the Progress Energy corporation. And both Duke and Progress Energy have long histories and big ambitions of becoming an even bigger player in building nuclear power plants to generate electricity.

Here in Florida, that nuclear ambition is being played out by political power that's allowed Progress Energy to charge its Florida customers for two questionable nuclear projects:

* First, a hefty portion of the staggering $2.5 billion repair bill for the Crystal River nuclear power plant, down since the fall of 2009 and broken by the controversial do-it-yourself fixes attempted by the power company. Read the Tampa Bay Times coverage on this fiasco (in order) here and here, and here and here.

* Second, even as Progress Energy struggles to revive the aging, off-line Crystal River nuke plant, it's charging customers now for preliminary costs tied to a long-proposed new nuclear power plant north of Tampa Bay in Levy Countythat may yet never happen.

Here's the real trick. Duke and Progress Energy are committed to a nuclear power future that increasingly -- for reasons of both cost and safety -- is pricing itself out of the viable market for generating electricity.

Progress Energy no longer quotes fresh costs for the Levy County plant because, in part, it's going to be a stunner. A plant (with two nuclear reactors on the site) that was once touted a just over $10 billion, soon went to $17 billion. Given the trend line -- not to mention to Japan nuclear disaster which will boost safety-related costs to any new nuclear plants -- it would not be surprising to see a plant cost topping $25 billion or perhaps even $30 billion by the time a Levy County plant actually comes online in the latter 2020s.

At some point, those costs will become clearly uncompetitive, despite Duke and Progress Energy's political power to convince legislators to see things their way.

There's been a steady flow of commentary in recent months about the declining competitiveness of nuclear power. And the federal government, for all its sporadic boosterism for nuclear power, is so financially pressed that it's proved unable to cough up the massive loan guarantees the nuclear power industry demands in order to break ground on large numbers of nuke plants.

Consider this latest commentary, dated Jan. 3 and headlined The End of the Nuclear Renaissance, in The National Interest. The key point? "In 2011, nuclear power ceased to be a serious option for meeting the world’s energy needs." So writes John Quiggin, the Hinkley visiting professor at Johns Hopkins University and an Australian Research Council Federation fellow at the University of Queensland. He is the author of Zombie Economics: How Dead Ideas Still Walk Among Us.

As Quiggin states in his commentary: "... after an initial rush of enthusiasm proposals for new nuclear plants ran into economic reality. When the deadline set under the Nuclear Power 2010 program expired, twenty-six proposals had been received by the Nuclear Regulatory Commission. But by the beginning of 2011, more than half of these had been abandoned, and ground had been broken on only two sites, with a total of four reactors.

"The nuclear renaissance was already tottering, but the disaster of Fukushima was the coup de grâce. It’s true, as nuclear advocates have argued, that the plants at Fukushima were old and that a disaster as big as the March tsunami was hard to plan for. No doubt the failures in cooling and containment systems that gave rise to the present crisis can be overcome and reactor designs modified to improve safety.

"But safety doesn’t come cheap, and redesigns mean delays. With no prospect of any further increases in subsidies and loan guarantees, it seems likely that most of the proposals for new nuclear-power plants in the United States will be abandoned."

Keep in mind this is just one view of a growing number of sharp minds that see nuclear power's role waning, not reborn, in the coming decades. It raises the key question for Floridians -- saddled now with repair and building fees in their electricity bills, charges that will skyrocket if the Levy County project continues: What are we paying for? Projects that may no longer prove financially competitive?

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Tampa Bay business news and insights are brought to you each day by business columnist Robert Trigaux and his fellow business writers. Venture provides an inside look at Tampa Bay companies as well as events, people, deal, triumphs and failures across the Tampa Bay economy.